What the Economic Crisis Means to You

At any given time in your life you may find yourself in a financial situation not of your making. The recent credit crisis in America is a prime example. It is a uniquely perfect storm to be sure, the kind of economic crisis that comes along once every 50 -100 years perhaps, but that doesn’t lesson the impact on your well being.

Economic hardships come and go, and are largely beyond our control as individuals but there are things we can do to prepare for such times. Severe economic downturns have some factors in common, and this current credit crisis is no different in this regard. Some effects we can expect include:

4 Responses to What the Economic Crisis Means to You

Global crisis is not only about companies of financial services. It is about common people as well. The ones with loans, credits, mortgages. The ones with jobs to preserve, houses to retain, families to maintain, relatives to support, children to send to colleges. The ones with budgets, where every cent has its destination. How many of the people lose jobs, cars, homes? How many have to cut out the spendings, which they considered a normal part of their lives?

No matter how you look at it, anyone and everyone is involved. We have seen some of the largest, most stable companies in the world impacted negatively because of a crisis rooted in lax government policy, greed on Wall Street in the financial industry, and horrible borrowing practices from consumers. We as US citizens will have to learn to live within our means to make it through this mess. It does no good to play the blame game and hold everyone else accountable for what is going on, especially since everyone is at fault. Maybe not individual consumers, but the consumer base as a whole.

I am yet to see anything that this “crisis” is going to do to me and people like me.

Its going to be harder to get a loan – ok, but it was too easy to get a loan before so now its just going to be back where it should be.

Small businesses will close – Only if they are not built on a strong financial plan that does not rely on credit and instead works off of sound business decisions and practices.

People will lose their homes/cars/rent to own appliances – Only if they cant make the payments. What you cant make the payment and were using credit to make them before? I wish I could say I’m sorry, but looks like you built the situation and now you get to live in it.

Retirement account values are dropping – I sympathize with those people near retirement age, but also wonder why they had their money was in something volatile if they couldn’t afford to lose it. As for me and people my age, get to buying the stuff is on sale.

Sorry to come off as not caring, but since I don’t care its hard to come off any other way.

You get right to the point and call out what the problems are, and we needed more of that on the way up to this situation.

I disagree with your statement about Small Business and think you may be missing the picture here. ALL businesses rely heavily on credit, it’s in how they manage that credit and how they run their business that determines how successful they are.

Terms like Net30 sound familiar? That is business to business credit, and the basic idea of business in is to make money off of other people’s money for as long as possible (a lot of individuals do this too)

So basically, the credit crunch is going to hurt everyone and every business, regardless of whether they have a solid financial plan or they’re following a good model or not.

Businesses that were able to get 5%-10% loans and turn 20%-30% profits are going to feel the hurt when those loans go up to 15-20%. And that’s not because the business wasn’t running a clean operation, it’s because they were playing the game that all other businesses must play to make it.